Purpose

To consolidate, disseminate, and gather information concerning the 710 expansion into our San Rafael neighborhood and into our surrounding neighborhoods. If you have an item that you would like posted on this blog, please e-mail the item to Peggy Drouet at pdrouet@earthlink.net

Tuesday, July 1, 2014

5 Lessons U.S. Transit Systems Should Learn from London

At the top of the list: Get people on board with annual fare increases.

Public transportation in London achieves the sort of
financial efficiency that most U.S. transit agencies can only dream of
matching. Last year, Transport for London (TfL)
spent 6.8 billion pounds operating its bus, rail, and metro systems,
and generated 4.8 billion pounds in revenue (mostly through fares). In
the parlance of transit wonks, that's a recovery rate
of roughly 70 percent. In general terms, it means riders pay for most
TfL operations, leaving taxpayers on the hook for only a slice.

The agency isn't stopping there. By the end of this decade, TfL
expects to break even across its entire system—meaning it won't need any
public subsidies for operations at all. (It will still require public
support for major capital projects
and some periodic maintenance.) TfL even plans to cover the cost of
routes and services that lose money but provide valuable public
services.

So what makes TfL so efficient? We posed that question to Shashi
Verma, TfL's director of customer experience, in the hopes of gleaning
some wisdom from our friends across the pond. Since 2008, says Verma,
TfL has made a "relentless push" to reduce operating costs while
increasing revenue. Our chat revealed five big lessons for U.S. agencies
to consider—with a recurring theme being that transit should operate
more like a private business than a public service.

"Improving productivity and reducing cost is something that the
private sector does every day," he says. "Why people in the public
sector think this is not part of their job is beyond me."

In U.S. cities, politicians often defer fare increases until there's a
funding crisis too big to ignore. That leaves a bad taste in everyone's
mouth about the transit agency's ability to manage its finances. It
also leads city residents to believe that fare hikes are only something
that should rarely occur.
In London, on the contrary, TfL fares rise every year—the only
question is by how much. There are loud objections over there just as
there are here, but the critical difference is that TfL has set an
expectation in the minds of travelers, not to mention politicians, that
fares must rise on an annual basis to meet costs. "That's the way we
keep the system properly funded year after year," says Verma.It probably helps that TfL has an extremely complicated
fare structure. Unlike in New York, for instance, where every bus or
subway ride costs the same price, London riders pay different fares
across all modes based on how far they're going and what time of day
they're traveling (with daily caps to limit how many any one rider pays
in a single day). So when TfL raises fares, the public must crunch some
serious numbers to determine just what that means.

Improve Service in Cost-Efficient Ways

What makes the fare hikes more palatable is that riders get clear
service upgrades for their money. For instance, TfL recently announced
that 24-hour weekend service
will be coming to the Tube in 2015. Verma says officials expect the
service to be financially neutral at worst and revenue-generating at
best.

What's critical to remember, says Verma, is that service improvements
must be efficient to be effective. Right now the Tube's Victoria line
runs trains with great frequency—34 an hour at times, or one every 107
seconds. Determining whether or not to increase that total is not just a
question of scheduling and track logistics, but also of whether the
resulting increase in ridership will offset the additional cost. A new
service that becomes a financial liability hurts system, rider, and
taxpayer alike over time.

Rider information is one area where low-cost interventions can have a major impact
on customer experience, says Verma. To that end, TfL recently installed
digital signs with live bus information at a range of public locations,
and launched a new mobile site with real-time travel information — an
upgrade enhanced by the fact that every underground Tube station will
have WiFi connection by the end of 2014. TfL makes its travel data open
to app developers, too.Embrace Technology

TfL is way ahead of most U.S. transit agencies when it comes to ticketing technology.
In addition to its Oyster card, a pay-as-you-go smart card that reduces
the need for ticket transactions, TfL has implemented contactless
credit and debit payment on its bus network (and will soon expand
the service to the Tube). By deducting fares directly from a bank
account, contactless payment means riders don't need to buy a ticket at
all.

The obvious advantage to ticketing technology is cost reduction.
Verma says TfL once spent 14 percent of its expenditures on fare
collection, but that figure is now closer to 9 percent, and falling. In
bigger news, the agency plans to close down all its ticket windows within the next year, an initiative that will save 60 million pounds annually.

Such
initiatives improve service, too. Quicker payment means quicker
boarding, which in turn means faster buses, which in turn means more
riders. "It's change of this kind that we're talking about with reducing
operating expenditures," says Verma. "But to be clear, this kind of
intervention also increases revenue, because we are reducing the
impediments for people to use the public transport network."

Train drivers are becoming obsolete with technology, too. TfL recently announced a plan to make its subway fleet fully automated
in the coming decades. Again the benefits are twofold: In addition to
saving labor costs, service improves with a driverless system, as
computers can control and operate high-frequency trains with a precision that human drivers lack.

Find Secondary Revenue Sources

Fares made up about 86 percent of TfL's revenue in 2014—the lion's
share, but not the entirety. Secondary revenue also played a key role.

Advertising is one of the biggest secondary sources of income. (Verma
says TfL is the "biggest advertiser in the U.K.") But unlike U.S.
agencies, TfL also generates considerable revenue through its real
estate holdings. Part of that revenue comes from developing land owned
by the agency. Another part comes from renting out shops and concession
space to vendors in and around the stations. Rents brought in more than
61 million pounds in 2014.

TfL also generates secondary revenue through London's congestion charging scheme.
That plan charges drivers for entering a zone in the core of the city
during certain times in the work week. In 2014, these charges amounted
to roughly 235 million pounds, or nearly 5 percent of TfL's gross
income.

Congestion Pricing Won't Solve Everything

Some U.S. transit experts believe congestion pricing may bethe key
to boosting rail and bus ridership in American cities. Verma isn't sure
that's been the case in London. He says the impact of congestion
charging on transit ridership is "marginal," in part because most of the
trips through the central city are already made by public transport,
leaving few car trips (he estimates 8 percent) up for grabs.

"Yes, there is an incentive to switch out of cars into public
transport, and it is there because of a solid public transport policy,"
he says. "But the actual impact on the public transport network is
pretty small."

Congestion pricing may well have more of an impact on transit in
American cities. Ridership rates are lower in the U.S. and driving is
cheaper compared to London, so there's greater potential for people to
switch modes as the cost of car ownership goes up. But the lesson is
worth heeding anyway because, at least at the moment, no U.S. city seems
serious about congestion pricing. Far better for U.S. transit agencies to rely on changes within their own power than to wait for those outside it.